TIPS In the News

The article appeals in many respects. First, it takes us through the historical aspects of the way the borders were demarcated in Africa and on the southern part of the continent. As noted, this was done by people who had no interest in the economic, social and political welfare of the natives of the land. It was done to serve their selfish interests. Second, the article takes us back to the formation of Africa's biggest liberation movement, the African National Congress (ANC) and the role that was played by, among others, the then Paramount Chief of Lesotho, Letsie II. In fact, most regional rulers in Botswana, Mozambique, Swaziland, Tanzania, Zambia, Zimbabwe etc. had a hand— directly and indirectly—in the formation of the ANC. Third, by quoting the former President of Tanzania, Julius Nyerere when an agreement was reached between the Republic of Tanganyika and the People's Republic of Zanzibar in 1964, to form a new state, the Republic of Tanzania, it gives us a glimpse of how some leaders felt about the way the borders were demarcated.

Climate change is increasingly recognised as one of the defining issues of the 21st century, drawing all elements of society towards the promotion of a prosperous, low carbon future. Even in times of economic recession, climate change has not fallen off the radar, with many major economies rather viewing 'green' led investment as an engine for economic recovery.

South Africa has become increasingly involved in addressing climate change issues, from our involvement in international climate negotiations, the modelling of potential mitigation scenarios under the Long Term Mitigation Scenarios (LTMS) process, and the current development of a national Climate Change White Paper. A significant amount of work has also been done to consider the direct impacts of climate change on the South African environment, including physical impacts related to higher temperatures, sea level rise, increased risk of wild fire and concerns over future water availability.

Despite these efforts, less emphasis has been placed on the indirect impacts of climate change, including how industry could be affected by shifts in consumer preferences, how the evolving carbon regulation environment in South Africa might affect industry, and how business and the economy as a whole should respond to these challenges.

To address this gap, research is currently underway that considers the indirect effects that climate change could have on South Africa's economy, ranging from impacts on the tourism sector, aviation and food exports, through to commercial opportunities in low carbon technologies and the promotion of alternative carbon markets. The project is being led by Camco, an international consulting firm specialising in climate change solutions, in partnership with Trade and Industrial Policy and Strategies (TIPS) and the ComMark Trust, with support provided by the British High Commission.

As part of the project, a stakeholder workshop including representatives from the private sector, national and local government, non-governmental organisations and the donor community is to take place in Sandton in mid-August, in order to discuss and debate the economic risks and opportunities posed by climate change for South Africa. Key questions to be discussed at the multi-stakeholder workshop include:

What commercial risks and opportunities do companies face from climate change?

How can we address these issues?

How will 'air miles' and the demand for low carbon goods impact South African manufacturing and exports?

Is the tourism sector adequately prepared for pressures to promote 'local tourism' within industrialised nations?

What opportunities are presented for trade in environmental services by climate change, including through land use improvements and carbon sequestration?

How can industry respond to a carbon tax regime in South Africa, and are there alternatives?

How can we fast-track activities that combat climate change and promote poverty alleviation and socio-economic development?

The research underway is premised on the understanding that climate change is not just an environmental issue, but could have significant implications for trade, investment and industry competitiveness. South Africa is a carbon intensive economy, and is therefore exposed to a number of potential climate change related liabilities. Nevertheless, risk is often the precursor of opportunity, and considerable scope exists for the South African economy to shift these potential liabilities into market enablers, as the LTMS and other studies have begun to explore.

The research will help to take the climate debate in South Africa forward, identifying economic opportunities presented by climate change and exploring synergies with national priorities relating to job creation, enterprise development and poverty alleviation. The notion of 'green jobs' has come increasingly to the fore in recent years, and highlights that a number of national efforts to address climate change could promote economic growth as well as support environmental protection. Across the globe, companies are exploring opportunities in low carbon development in a bid to differentiate themselves and maintain market share. Effectively positioned, the South African economy could weather any severe 'climatic' storms, whilst maximising on commercial opportunities and new markets.

The Botswana Institute for Development Policy Analysis (BIDPA) hosts the thematic research area "Trade Policy and Pro-Poor Growth", under the Southern African Development Research Network (SADRN). SADRN is hosted by the Trade and Industrial Policy Strategies (TIPS) in South Africa and is funded by the International Development Research Centre (IDRC).

The mandate of the network is to ensure that the Southern African Development Community (SADC) countries have the requisite research and negotiating capacity to enable them to negotiate for a fair share of the benefits of global trade at the WTO and other fora. Specifically, the network has the objective to achieve trade, growth, globalization and poverty reduction through:

Increasing supply of policy-relevant research in SADC by increasing the pool of suitably-skilled researchers based in institutions in SADC;

Improving the policy relevance of research by developing the capacity of policy makers to discerning research users;

Developing an appreciation of evidence-based policy making by engaging policy makers in the design, specification, implementation and review of research projects; and

Building institutional capacity in key organizations in SADC by creating centers of excellence in focus thematic areas of research.

To meet the SADRN objectives of increasing supply of policy relevant research in SADC, BIDPA, under the auspices of the "Trade Policy and Pro-Poor Growth" theme invites government departments (or government research departments) from SADC Member States to submit proposals to be considered for research on Trade Policy and Pro-Poor Growth.

Submission Instructions

Submit a proposal describing your topic of interest; proposed methodology; motivation for the topic and its potential impact in your respective country (or in the SADC region) and the proposed budget.

Please note that the identified research topic should be in line with the theme and should be of policy relevance to the country concerned.

Guidelines for submission:

Deadline for submission: 24th April, 2009

Notification of the accepted paper: 4th May, 2009

Notification of receipts will be sent to the designated authors soon after receipt of the proposal.

Funding

Funding is available for only one project and as such only one proposal will be selected from the submitted proposals.

TIPS was commissioned by FABCOS (The Foundation for African Business and Consumer Services) to undertake a study on the impact of fuel and food price increases on small business. As FABCOS has a large constituency of informal or previously informal businesses, a strong emphasis was placed on the impacts for informal businesses. Some key outcomes are highlighted below:

Fuel Prices

The main effects of high fuel prices can be observed within the macro-economic framework. The first impact reflects the role of transportation in determining the price of goods: South Africa is a large country, and highly dependent on the transportation of goods by road (given the currently very poor state of the rail network). Most micro enterprises are dependent on hired transport to fetch items from wholesalers and/or manufacturers. Although the cost of these services increases as the fuel price increases, there is good evidence to suggest that these prices are both downwardly "sticky" (i.e. that they do not go down when the petrol price declines) and that transport service providers take advantage of general perceptions about rapidly rising fuel prices to increase their margins. The result is that small business owners who are dependant on these forms of transport probably face disproportionate transport costs increases, compared to bigger businesses that control their own logistics. This reduces the competitiveness of the smaller businesses.

The second impact is through the regulatory response to inflation. Higher interest rates reduce the disposable income of consumers, by raising debt service costs. As consumers spend more of their disposable income on servicing debt, so they have less to spend on other items.

The third issue for small businesses arising from higher inflation is that, generally, they are not in a position either to negotiate price concessions from manufacturers or wholesalers or to pass inflationary costs on to their consumers. While it is, of course, true that lower consumer expenditure affects all business; small businesses are generally in a much weaker position to ride out periods of reduced consumer spending. The smaller the business, the more vulnerable it is to this.

To date, the ability of many small retail enterprises to survive has been based in large part on their proximity to their clients (convenience), and the (rising) cost of travelling to shop at a large retail centre. However, the official development policy of most Metros in South Africa is to encourage large retailers to penetrate enter the townships, and this is having a considerable impact on the ability of small traders to survive. These small businesses are not opposed to anti development in the townships per se, but they do feel a certain level of resentment towards economic planners who trumpet the necessity of encouraging small business development on the one hand, whilst but on the other hand encouraging development that puts those enterprises at considerable risk.

Food Prices

According to Statistics South Africa, food's weight in the Consumer Price Index (CPI) is just under 21%. As such, an increase in food prices will have an impact on general price levels. However, we should not confuse the official weighting of food in the CPI with the actual role of food in monthly household expenditure for many South Africans. Given that South Africa has one of the world's worst distributions of income, there is really no such thing as an "average" consumer. In general terms, the poorer a person, the greater the share of their income that they will spend on food, and the greater the impact on their disposable income of food price inflation that exceeds the rate at which their wages are increasing. Data indicate that the very poorest South Africans spend as much as 80% of their income on food.

Whilst general prices have increased steadily over the past five years, the data show that food inflation (CPI-F) generally increased faster than general inflation, but has done so in particular since the end of 2005. Except for the periods between August-October 2005 and the same period in 2006, food inflation has tended to be higher than the general price level (CPI) of all items. In particular, for the period between September 2007 and 2008, the gap between the two has been widening, implying that more price pressure is being observed in food than for other items.

Another key issue is that for the period between November 2005 and 2006, price increases in rural and urban areas were similar. However, since early 2007, rural prices have tended to grow faster than urban prices. The fact that rural populations spend roughly double (IES, 2006) on food compared to urban groups leaves rural populations at a disadvantage since generally have less disposable income than urban populations.

The two main impacts of rising food prices on micro enterprises are a direct impact (through the erosion of purchasing power of their clients) and an indirect impact (through the erosion of the businesses own purchasing power).

In terms of the direct impact on business through the erosion of their clients' purchasing power, the first point to be made is that the small enterprises that we are considering tend to have lower-income people as their main clients. When food prices are rising more rapidly than the "official" rate of inflation (which sets wage and social grant increases) then these people will have less non-food disposable income and may be forced into actually purchasing less food. Both of these are bad news for small business.

The indirect impact of rising food prices on small businesses comes via the reduction in the disposable income of the business owner. Most of the small businesses under consideration are owned by people who do not fall into the high-income category. Therefore, they tend to spend a relatively high portion of their income on food, and higher food prices mean less income available for other items. The reason why this is important is because most of these small businesses finance their expansion and cash flow requirements from their own savings, and are not able to source other types of finance. Therefore, a reduction in disposable income means less money is available for investing in the business or helping to ride out adverse business periods. This makes small businesses relatively more vulnerable than other type of businesses to adverse price changes.

The Think Tank Initiative invites applications from independent African organisations that are committed to using research to inform and influence social and economic policy. The Initiative will provide multi-year funding to promising think tanks, and will work with successful applicants to improve their organizational performance.

For more details on the Initiative and the application process, visit The Think Tank. Deadline: August 19, 2008

The Think Tank Initiative is a new, multi-donor programme dedicated to strengthening 'independent policy research institutions' or 'think tanks' in developing countries, enabling them to better provide sound research that both informs and influences policy.

The Initiative will focus its activities in East and West Africa, South Asia, and Latin America.

In his State of the Nation address in February 2007, President Thabo Mbeki announced some stimulus towards the industrial policy strategy totalling over R7-billion in tax incentives and support. This was followed by some details in the Budget Speech provided by Minister of Finance Trevor Manuel in the subsequent week. Read more...

The inconclusive economic partnership agreement (EPA) of 2007 has had to give way for other trade-related topics as developing countries having other challenges to face. EPAs have always been associated with additional confusion beyond multiple memberships. Implementation of the regional integration in Southern Africa in conjunction with the EPAs was always going be complicated from a developing country view and there are still concerns that EPAs will undermine regional integration initiatives. Read more...

The Southern African Development Research Network (SADRN) is a new regional initiative funded by Canada's International Development Research Centre (IDRC) and managed by Trade and Industrial Policy Strategies (TIPS). SADRN's objective is the co-ordination and delivery of policy-relevant research in the southern and eastern African region, as well the provision of related technical support to policy-makers. Its launch workshop in October 2007 was attended by more than a dozen regional economic and research institutions.

SADRN will capitalise on existing networks in the region and operate through annual rounds of stakeholder consultation, as well as workshops and seminars. Research efforts are focussed within three broad thematic areas identified as key at the Launch Workshop:

Industrial policy and sector development at the regional level;

Service sector development and the impact on poverty; and

Trade policy and its linkages to pro-poor growth.

Implementation of these research themes will provide an opportunity to bring the regional and relevant global research communities together to engage in an ongoing policy debate and development process. This process will also involve institutional capacity-building and institutional strengthening in the region. In addition, the Network aims to provide an effective channel for training and dissemination of research and policy activities. The envisaged outputs of the Network in the medium term are as follows:

Increase the supply of policy-relevant research in the SADC region;

Improve the policy relevance of researchthrough strengthening the capacity of policy-makers to be discerning research 'users';

Develop an appreciation for evidence-based policy-makingby engaging policy-makers in the design, specification, implementation and review of research projects; and

Build institutional capacity in key policy research institutes in SADC via the creation of Working Groups in focused thematic areas of research.

SADRN is therefore inviting interested regional institutions to submit Expressions of Interest to host one of the themes described above for a minimum of two years. The scope of activities in the specified thematic area shall include, but not be limited to, the following:

Conduct policy-relevant research in the selected thematic area;

Identify existing research and knowledge gaps;

Conduct training courses, seminars and workshops;

Maintain consistent communication and network with regional policy-makers on the subject;

Create, maintain and update a database of existing information on institutions, available research and expertise in the region;

Disseminate the outputs and outcomes of all activities; and

Involve and develop younger researchers and provide mentoring support of a technical nature.

We invite interested institutions from Southern Africa, including research organisations and relevant university departments, to submit brief technical and financial proposals by Friday 29 February 2008. Further information may be obtained from Mmatlou Kalaba - e-mail: mmatlou@tips.org.za, tel: 012 431 7900 or fax: 012 431 7910.

A new programme, the 2nd Economy Strategy Project has been added to the website. The purpose of this project is to contribute to reducing poverty and inequality in South Africa by supporting the government to develop a Strategy for the Second Economy, as part of its Accelerated Shared Growth Initiative of South Africa (Asgi-SA), located in the Presidency. Asgi-SA's target is to halve poverty and unemployment in SA by 2014. Find out more here.

One of the major talking points around the EPAs is that negotiations have greatly undermined regional integration initiatives in Eastern and Southern African and elsewhere. The State of Doha Round - It has been more than six years since the Doha Development Round of World Trade Organisation (WTO) was launched at the Fourth Ministerial Conference (1). The agenda initiated negotiations on agriculture and services. The Fifth Ministerial Conference was supposed to be a review where members would agree on how to complete the rest of the negotiations, but progress was hindered by disputes on agricultural issues and ended in deadlock on the new generation issues

Post-apartheid South Africa embarked on a trade policy framework to make the economy competitive by engaging the international community. That framework took the economy through a gradual process of reforms that resulted in a shift - from being one of the most protected and distorted markets in the world to the one that reflects openness. The momentum was carried forward by the signing of the General Agreement on Tariffs and Trade (GATT) in 1994 and implementation of the free trade agreements (FTAs) with the European Union (EU) and the Southern African Development Community (SADC) in 2000.

Furthermore, South Africa has given consideration to FTAs with China, India, Brazil and Unites States as it tries to broaden trade relations across the globe. The most observable feature of these commitments is the reduction of import protection. This is based on the principle that resources will flow from uncompetitive sectors to sectors with a comparative advantage as competition increases, known as allocative efficiency. The same argument can be used to refer to the trade partners that dominate relations with South Africa: that trade should be biased in favour of the competitive ones at the expense of uncompetitive ones.

The revision process that was carried out on the 2006 Southern African trade data has been completed. The 2006 data (for most of the SADC member states) are back online - please visit the database at http://www.sadctrade.org/tradedata. If you have questions around the Southern African trade database, please contact Mmatlou Kalaba.

The National Energy Regulator of SA (Nersa) is just over a year old but has quickly established itself as a force to be taken seriously. From its comprehensive reports on SA's electricity crisis to its two landmark petroleum pipeline decisions, it has show that it is a regulator in the true sense of the word and not a negotiator.

GENEVA, April 12 (Xinhua) -- World trade is expected to grow slower in 2007 given the prospect of weaker economic expansion in the coming year, the World Trade Organization (WTO) said on Thursday.The global trade growth could slow down to 6 percent from 8 percent last year as world economic growth is expected to slip to 3 percent from last year's 3.7 percent, the WTO said in a report on trade in 2006 and prospects for 2007.

The University of Adelaide's Institute for International Trade is undertaking a $456,000 12-month study to identify the best trade policies for poverty reduction in the Asia Pacific region. The project is being supported by AusAid and the World Trade Organisation (WTO), and will involve several Schools within the University of Adelaide as well as academic and business researchers throughout the region.

Johannesburg - The presidency has commissioned the country's first national income study to help the government get a better understanding of the extent of poverty. The study, which gets under way next year, is an acknowledgment that poverty remains a central issue. The national income dynamic study will be conducted by the SA Labour Development Research Unit (Saldru) based at the University of Cape Town (UCT), rather than by Statistics SA or the Human Sciences Research Council. The study will track 8 000 households indefinitely to provide policy makers with a better understanding of the dynamics of poverty.

Even if South Africa is to create new jobs in the period leading up to 2015, this is unlikely to make a major dent in reducing poverty. This emerged as the central policy question (aside from differences over the extent of poverty) during a debate on poverty and inequality at last week's Trade and Industrial Policy Strategies and the University of Cape Town Development Policy Research Unit (DPRU) conference.

The release of important economic data always makes headlines. But Corne van Walbeek, a senior lecturer at the University of Cape Town (UCT), warned yesterday that the statistical authorities and the financial press should treat initial releases with caution. Van Walbeek, of UCT's school of economics, raised the issue in a paper presented at a conference arranged by the Development Policy Research Unit [and Trade & Industrial Policy Strategies].

Efforts by Transnet and Eskom to promote the development of local suppliers of capital goods for their infrastructure programmes aimed to address the real risk that parastatals might struggle to source some of the items they need on global markets, and would not delay the infrastructure roll out, the official responsible for driving the supplier programme said this week. The public enterprise department's Edwin Ritchken was speaking at a conference on accelerated and shared growth in SA, hosted by the University of Cape Town's Development Policy Research Unit and TIPS (Trade and Industrial Policy Strategies).

Robert Pollin, Jerry Epstein, James Heintz and Leonce Ndikumana of the University of Massachusetts-Amherst, US presented brief highlights of the major proposals from their recently published book An Employment Targeted Economic Programme for South Africa at the 2006 Forum. Pollin is a director of the Political Economy Research Institute at the University of Massachusetts-Amherst.

A RESEARCH paper by a trade and industry think-tank has echoed the urgent need to create more jobs in the country. The paper, published by Trade and Industrial Policy Strategies (Tips), showed a drop in employment across all industrial sectors except one from 1990 to 2001...

SA's manufacturing performance since the 1990s has been below par and the trade and industry department's incentive strategies to boost the sector have not been effective, according to the department's former chief economist...

SHOULD SA have an inflation cap on increases in administered prices? The Reserve Bank, MPs and others have fingered administered prices as an inflation culprit. Tariff increases implemented by public entities, in sectors such as telecommunications, electricity and transport, have run ahead of the inflation target range, putting upward pressure on prices and undermining efforts to bring inflation down to within the range...

THE World Trade Organisation (WTO) was, and largely remains, developing countries' best hope for mitigating the uneven power relations between large developed nations and small developing countries in the trading environment.

Tisa says local manufacturing industry has continued to grow, while reliance on gold and diamonds has halved Trade and Industry Correspondent TRADE and Investment SA (Tisa) a government agency responsible for promoting investment and export development...

The World Bank's new chief economist for Africa, John Page, says Africa needs a political deal to foster economic growth. He spoke to Carol Paton at the Tips/Development Policy Research Unit's annual forum in Cape Town.